Is High School Employment Consumption or Investment?

22 October 1997

An article by Ruhm, C., Journal of Labor Economics, Vol.15, No.4, pp. 735-776

The research presented here challenges the view that time spent in employment hinders the long-term development of high school students. Such a view is argued to be based on non-representative samples and exaggerated claims of rapidly increasing in-school work over past decades. Using the October Current Population Surveys, Ruhm shows that in fact there has been little or no increase over time in either employment probabilities or work hours, and that relatively few students work the long hours that would merit concern.

The research is based on data from the US National Longitudinal Survey of Youth, an initial sample of 1,149 youths interviewed annually from 1979 until 1991 when 93% of the original sample was interviewed. It thus provides the “best available information on long-term effects of student job-holding”. Employment and earnings of participants during the week prior to the annual survey (‘reference week’) are compared with data on attainment and other variables. Regression analysis is employed to account for the selection process into student-job holding and a wide range of factors that may affect outcomes for students.

Analysis reveals no evidence of detrimental effects of low to moderate amounts of student employment and in fact shows that having a job in the senior year of high school is associated with substantially elevated future economic attainment (measured by earnings, wages, total compensation, occupational status, or the receipt of fringe benefits). For example, compared to non-working ‘seniors’ (UK Year 13), 10 hours of reference week employment is associated with 14% greater future earnings, 94 hours per year of additional work, a 6% rise in hourly wages, and an 8% increase in total compensation (if working 20 hours per week, predicted gains are even greater: 22%, 182 hours, 9%, and 11%, respectively). Contrary to popular fears, educational attainment is not jeopardised by moderate work, partly because the time spent working reduces leisure pursuits much more than it decreases school or homework activities. Educational attainment is noted to be adversely affected for those working more than 20 hours, however, especially for females. In terms of future earnings, however, significant differences are noted for men and women: the financial benefits of light to moderate amounts of ‘senior’ employment are much higher for females than males (e.g. working ten hours is associated with a 23% increase in future earnings and a 16% rise in hourly compensation for women as opposed to13% and 4%, respectively, for men).

In conclusion, the investigation indicates that “student employment raises future productivity through the skills, knowledge, work habits, and experience provided on-the-job by far more than it detracts from educational human capital investments” and, with knowledge of such net benefits, should be encouraged.

“Is High School Employment Consumption or Investment?” – full article

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